Monday, January 16, 2012

Review: Boomerang: Travels in the New Third World

It didn't take very long to realize Boomerang is a reprint of various Michael Lewis articles for Vanity Fair. This in itself is not unfortunate, as the articles are well written and a lot of fun to read.

The book starts with coverage of Greece's financial crisis, and the (by now) well-documented fact that the Greek have a revenue problem in that everyone cheats on taxes. Then he moves on to Iceland, which had turned itself into a financial center by effectively trading equity to each other at insanely high prices. Then he moves on to Ireland, where the housing bubble took off in a big way, but the government came in and guaranteed all the private sector loan, in a major case of major-bone-headedness, damning the Irish public to pay for the sins of the crazy people.

The book rounds off with an examination of the Germans and the Californians, each of whom have yet to dealt with their own crisis. At the end of reading all of these short articles in short order (this is a very short book, and easily read in one day), it's tough not to come to the conclusion that every country treats finances and financial responsibility very differently. Culture explains almost all of it, though it doesn't explain the bone-headed behavior of certain officials (and I don't mean the Californians exclusively) very well.

Unfortunately, the treatment of the financial topics is very shallow. For instance, there's no contrasting of the very different ways Iceland and Ireland chose to handle their crisis. In hind-sight, the very big differences have led to vastly different outcomes. Because Lewis doesn't actually have a framework or theory to hang it all together, the reader is left thinking that there's not a lot that can be done. He doesn't even interview people who think that the problem is soluble.

This is very easy vacation reading, but unfortunately, not very good for people who want a deeper understanding of the current arguments about what to do about the economy. For that, you might want to read The Big Short instead.
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